ENERGY SAVING GAME

Key Points

Phase 1: Energy Conservation

• The 2001 law laid down standards for energy conservation and efficiency to be followed by a group of selected industries and commercial complexes.
• Efficiency standards were prescribed for appliances such as air conditioners and refrigerators.
• The law set up the Bureau of Energy Efficiency (BEE) to promote the use of efficient processes and equipment to save energy.
• The star ratings on household appliances and large-scale shift to LED bulbs were successful initiatives of BEE that have resulted in massive overall energy savings Over the years.
• India’s energy intensity or energy consumption per unit of GDP, has declined significantly (meaning we are using less energy to create the same product or service).

Phase 2: The New Provisions 

• Like the standards for appliances and equipment, energy consumption standards will be specified for motor vehicles, ships and other water vessels, industrial units and buildings.
• The government will be empowered to prohibit the manufacture or import of vehicles and water vessels that do not conform to prescribed energy standards.
• Every building industrial, commercial, or residential with a certain threshold of energy consumption, will have to adhere to new sustainable building codes.
• The building will be required to ensure that at least a part of its total energy consumption comes from renewable or non-fossil fuel sources.

Carbon Markets

• The creation of a domestic carbon market is one of the most significant provisions of the proposed amendment bill.
• Carbon markets allow the trade of carbon credits with the overall objective of bringing down emissions.
• These markets create incentives to reduce emissions or improve energy efficiency.
• For example, an industrial unit that outperforms emission standards can gain credits and show compliance with the standards.
• The unit that did better on the standards earns money by selling credits, while the buying unit can fulfil its operating obligations.

The Kyoto Protocol

• The predecessor to the Paris Agreement, prescribed emission reduction targets for a group of developed countries.
• Other countries did not have such targets, but if they did reduce their emissions, they could earn carbon credits, which could be sold to developed countries that were unable to meet their obligation to reduce emissions.
• But after functioning well for a few years, this market collapsed due to a lack of demand for carbon credits.
• A similar carbon market is envisaged under the Paris agreement but the details are still being worked out.
• The Emission Trading Scheme (ETS) works on a similar principle, an industrial unit in
  Europe must adhere to prescribed emission standards and they buy and sell credits based on their performance. China too has a domestic carbon market.

 PAT Scheme in India

• The scheme run by the Bureau of Energy Efficiency( BEE), in PAT –(perform, achieve and trade) allows units to earn efficiency certificates if they outperform prescribed efficiency standards.
• The laggards can buy these certificates to continue operating.
• The new carbon market that is proposed to be created after the existing Energy Conservation is amended, will be wider in scope and on lines of European ETS, facilitating buying and selling of carbon credits.